Amid a rain-soaked Rishi Sunak announcing a general election and a flurry of curious policy proposals like forcing teenagers to volunteer or join the forces, you might have missed that the UK is now a step closer to joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The UK’s accession to CPTPP has not been without controversy. The government has claimed that it's a sign of the UK’s strength and is only possible thanks to Brexit. Those on the opposing side have pointed out that the economic value of joining is negligible and pales in comparison with the loss suffered from leaving the EU.
My own view on the UK joining the trade bloc is that while it will likely only bring modest economic gains, there is absolutely nothing wrong with this. Moreover, it is not just about economics - it helps strengthen relationships between the UK and strategically important and growing countries around the world.
Joining CPTPP also matters as it shows that trade is still a thorny policy matter. If the polls are to be believed then the UK will soon have a new government and hopefully a fresh approach to trade policy.
The next government needs to take a more mature approach to international trade and adopt a position which builds on the country’s strengths and so maximises the potential economic returns of trade deals.
The first step is for the government to embrace the fact that the UK’s main strength lies in things such as services, technology, and advanced manufacturing and that the majority of these industries are based in London and other major cities. This matters because most free trade deals do very little to boost services trade. Most FTAs focus on eliminating tariffs and quotas on goods which means that we would not expect to see much of a boost to services from trade deals.
As such, the next government needs to ensure that any future trade deals it strikes place a premium on services which will involve the slashing of red tape which makes it difficult for UK firms to do business in other countries. A lot of this will actually be quite dull and not very headline grabbing – I say this as someone who has worked on trade deals – but it matters and so the next Trade Secretary will have to resist the temptation to get shallow deals which bring little economic benefit and only serve as a good photo opportunity for politicians.
It will also be deeply unpopular. Prioritising services means that naturally other areas of the economy will be deprioritised. There are always winners and losers in trade policy and in the UK’s context the industry which needs to be deprioritised is agriculture. Farming is hard and those who do it deserve our respect. However, in economic terms the value of agriculture is miniscule. Unfortunately for the country and especially areas such as London, it also has an outsized influence on government policy. Concerns over the impact on the country’s agricultural sector is why negotiations for an enhanced trade deal with Canada stalled and why any deal with the US is unlikely to happen.
Such a situation is unsatisfactory. A trade deal with the US has the potential to be incredibly significant for the UK as a whole and for London in particular. The next government needs to take the tough decision of dropping objections to chlorinated chicken and hormone treated beef and be prepared to abolish all agricultural tariffs and quotas if that is what it takes to get a deal with the US and other wealthy nations.
Finally, the next government needs to reform the Board of Trade. In its current form it is ineffectual and is made up of politicians, former politicians, and big businesses. It should be a truly independent body tasked with developing trade policy and monitoring the government’s performance in this area.
International trade has brought immense wealth to the UK and having an independent trade policy has the potential to be a true benefit of Brexit. This means it is too important to be run by amateurs or shaped by rent-seekers. The next government needs to be prepared to be bold and risk being unpopular if it wants to reap the rewards of a well thought through trade policy.
